Economic Crisis: What Nigeria must do now — Paul Alaje
By Dickson Omobola
Chief economist at SPM Professionals, Dr Paul Alaje, has urged the Federal Government to increase the manufacturing sector’s contribution to the gross domestic product, GDP, to 40 per cent, saying it is the best option to save Nigeria from the current economic crisis.
Alaje said there were no immediate fixes to Nigeria’s economic problems, saying most solutions were either in the medium term or long term.
The economist also said for Nigeria to have a resilient economy able to withstand shocks that might arise from President Donald Trump’s tariff, there was a need to look beyond crude oil sale and fix power, reduce dependence on importation and implement better economic policies.
He spoke on the Morning Show, an Arise TV programme.
His words: “I think it is important for us to rejig the budget. I think we are smelling the coffin now because if the price of crude drops to $40, Nigeria cannot survive it. That is the reality of today. Look at our budget, it is over $30 billion, and the assumption is over $70 per barrel. As we speak, the price is dwindling, and it is not just in the oil market.
“We are seeing what is happening in the capital markets around the world because of the tariff war. Not all countries have responded yet, but more countries will still respond. Clearly speaking, when it comes to the target of inflation, President Bola Tinubu has announced 15 per cent, and 15 per cent of the old methodology is not realistic. If we were to use the old methodology, inflation today would have been around 32 to 33 per cent.
“Yes, we have adjusted our methodology, so we will not be comparing apples and bananas. That 15 per cent will be readjusted in the reality of today’s methodology and the reality of what is happening around the world today.
“Talking about revenue targets, it is obvious that it may be difficult to meet up with our revenue targets as we have projected in the budget. What are we faced with? Are we going to look for new revenues which is another option but a very difficult option or do we go aborrowing? When we borrow, it certainly has implications.
President Tinubu attrition combining subsidy removal and devaluation of the Naira has been able to reduce…GDP from 98 per cent to around 68 per cent, and now going to 70 per cent of our revenue per annum.
“If you borrow more, it only makes sense to say that percentage may go up. In the short term, there are very few options available on the table, but most economic solutions don’t come in the short term; at best they come in the medium term. That is why we have continued to maintain that what will deliver Nigeria out of the economic quagmire, not just now, but in the near future is manufacturing. I am not just saying production, but manufacturing.
“Our manufacturing component of the GDP must increase to 40 per cent. We have sandwiched manufacturing and production in our GDP numbers. We are doing agriculture and service. In between, we have production and that production, you see manufacturing takes a small component. That is what we need to expand on such that even when there are externalities or shocks around the world, the impact would be there, but it will not be devastating to the point that we go back and adjust our budget.
“I want to believe that we need to do this, especially when we consider factors that will make this a reality. From electricity among other policy factors that I believe that the economic team of Mr President can quickly look at, and make Nigeria a country that to a large extent, its economy will be resilient beyond what we have been speaking about in the last two decades.”
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Economic Crisis: What Nigeria must do now — Paul Alaje
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